The differences between the NYS Senate and Assembly proposals to change Cannabis taxes
Negotiations Underway for New York's Wholesale Cannabis Sales Tax Rate.
It’s a fair bet that Gov. Kathy Hochul’s proposed 9% tax on wholesale cannabis sales — which would replace the much-maligned potency tax — will be pared down.
But exactly where it will land is being hammered out right now by Senate and Assembly negotiators in conjunction with Hochul’s budget team.
The Senate proposal, which was crafted in large part by State Sen. Jeremy Cooney, D- Rochester, takes a much different approach than the Assembly or the governor’s plan.
It calls for a multiyear, phased-in system, starting at 5% of wholesale sales in 2024, then graduating to 7% of sales in 2028, and culminating in 9% of sales starting Jan. 1, 2031.
“The lower initial tax will provide a substantial boost to our dispensaries,” Cooney said.
The Assembly, on the other hand, is proposing a permanent 7% wholesale tax rate going forward.
Under both systems, the state retail excise tax rate would remain at 9%, and the local retail excise tax rate would remain at 4%.
The office of Assemblywoman Donna Lupardo (D-Binghamton), chair of the Assembly Agriculture Committee, told NY Cannabis Insider that both the Senate and Assembly plans were designed to be revenue neutral with what’s currently coming in under the (soon-to-be scrapped) potency tax system.
Kaelan Castetter, managing director of the Castetter Cannabis Group, said the Senate proposal “starting at 5%, and gradually increasing over eight years, allows our New York businesses to build a strong consumer base.”
While in “the early stages of the market, with thousands of illicit shops and their importing cheap out-of-state cannabis, we need a tax structure that allows for our operators to compete,” Castetter said in an email.
State Sen. George Borrello (R-Jamestown), ranking member of the Senate Agriculture Committee, said while he was glad to see a reduction to 5% in the Senate plan, lightening the tax burden on retailers and customers was “not the answer.”
“New York State overtaxes every business — that’s nothing new,” Borrello said. The real culprit was “legalizing the recreational use of pot three years ago” without a solid rollout plan, which “supercharged the black market.”
Borrello, who was a member of the special cannabis subcommittee that investigated the botched rollout last year, said, “Anything else that we do now is just nibbling around the edges.”
“No one’s going to stop the black market now,” he said, so “we should just put them in prison” if they’re “selling illegal weed.”
